[Editor’s Note: Mr. Rice is a lobbyist for City Hall.]
Dateline Sacramento – Redevelopment – Urgent issues – Assembly Democrats encourage local governments to let us know about problems they identify in dissolving Redevelopment Agencies by Wednesday and establishing successor agencies to wind up redevelopment obligations.
Unfortunately, the alternative redevelopment program that was passed by the Legislature last year was challenged and struck down by the state Supreme Court, requiring that Redevelopment Agencies dissolve.
Repealing the dissolution mandate is not a realistic option given Gov. Brown’s position and state budget requirements. Our immediate focus is on implementation problems that require an urgent legislative solution in the next few weeks or months. After dealing with these immediate concerns, we plan to focus on the need for long- term approaches to support smart growth, housing, and economic development.
Generally, issues of immediate concern will fall into the following two categories:
•€€Issues, if any, which must be resolved before Redevelopment Agencies are dissolved (under the Supreme Court order this occurs on Wednesday). For example, an issue has been raised regarding the ability to make bond payments or to arrange refunding of debt balloon payments due shortly after Feb. 1 in areas in which a successor agency has not yet been designated or able to begin operation.
•€Other issues that may require quick legislative resolution but not necessarily before dissolution occurs. For example, issues have been raised regarding whether certain loans from communities to their Redevelopment Agencies will be considered enforceable obligations and repaid even after dissolution. Another issue is ensuring that sufficient property tax funds are reserved in the first half of the year if higher debt payments are required in the second half of the year.
As for Property Taxes
Several common concerns already are addressed in the dissolution legislation:
•€Redevelopment Agencies and their successor agencies have limited liability – capped at the amount of the property tax allocated to the successors and the value of any assets transferred to the successors. Cities or counties acting as successor agencies do not incur additional liability exposure. Redevelopment employee obligations, such as pension obligations, unemployment payments or other obligations under collective bargaining agreements with the employees of the former Redevelopment Agencies, are enforceable obligations that will be paid from property tax allocations to the successor agencies.
•€Redevelopment assets that serve a governmental purpose, such as roads, schools, parks and fire stations, may be transferred by the successor agency to the appropriate jurisdiction under the terms of any original agreement with the former Redevelopment Agency.
•€Whether partially-completed projects can be finished and paid for as Redevelopment Agency-enforceable obligations depends on the specific circumstances. Projects largely complete (e.g., just need to put on the roof) with outstanding contracts likely would be completed. Projects in earlier stages or with only a development agreement may be terminated even if some liability must be paid. The successor agencies and oversight boards will make these determinations, subject to Dept. of Finance review.
Mr. Rice may be contacted at tonyrice@riceenglander.com
